Daily Insight: Global Oil Rig Counts: …Innuendo for Nigeria?

OPEC’s Month-on-Month Report (MOMR) published in May-2018 highlighted, among others, the movement in rig counts – the number of drilling rigs actively exploring/developing oil or natural gas – between March and April 2018. Global rig counts fell 90 units, from 2,260 units in April to 2,170 units in May. Non-OPEC rig counts diminished 82 units to 1,609 units while OPEC’s dipped 8 units to close April 2018 at 561 units. Contrariwise, the US alone recorded the highest m/m increase, up 23 units to a 4-year high of 1,011 units, far above the additional 5 units recorded in Africa, 4 in Asia and nil in the Middle East.

Nigeria recorded 1 unit increase in rigs counted to 32, higher than 28 units in 2017. This implies that the drive for investment into the country is paying off, especially as the recovery in the broader economy strengthens.

While the news of an uptick in rig counts in Nigeria is cheery, surging rig counts in the US should not be overlooked as this followed an earlier report by EIA
that crude oil production in the US touched a record high of 10.47mbpd in Mar-2018. Balancing the foregoing with an imminent production rampup by OPEC, oil prices may witness some downside pressure. For Nigeria, this could mean less accretion to reserves amid fears of volume pressure coming from risk surrounding the
2019 general elections.

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